Market Snapshot, Noon CT (VIP) -- January 17, 2013

January 17, 2013 06:02 AM
 

Corn futures have softened slightly to post losses around 3 to 6 cents.

  • Traders are taking a step back and booking some profits in the corn market today.
  • While tight carryover supplies will continue to limit the market's downside risk, signs export demand are improving are likely needed to spark the next leg higher for corn.
  • This morning's weekly export sales tally of 393,300 MT for 2012-13 topped expectations, but the total was by no means impressive.
  • Steady Gulf basis levels at midday after steady to lower prices for near-term delivery this morning signal fresh demand news remains lacking.
  • News the International Grains Council trimmed its 2012-13 global corn carryover projection by 3 MMT to 113 MMT was offset by the fact that it also raised its its global corn production projection by 5 MMT from last month to 845 MMT. Both tallies are well below year-ago, however.
  • March corn futures continue to test but respect support at the 50-day moving average, which stands at $7.25 today.Soybean futures have softened to post losses of roughly 9 to 12 cents.
  • Traders are taking advantage of the recent rally in beans by booking profits.
  • Investors are ignoring this morning's impressive weekly export sales of nearly 1.609 MMT (a marketing-year high) for 2012-13 and 180,000 MT for 2013-14, as well as a daily soybean sale of 240,000 MT to unknown destinations for 2013-14. This signals traders see strong demand as factored into prices.
  • Similarly, dryness and heat in Argentina has faded as a source of support as favorable conditions in Brazil mean a large crop is still expected. A fresh South American weather scare is likely needed to spark additional buying.

 

Wheat futures are posting slight losses in Chicago and Minneapolis, while Kansas City wheat is mostly 8 to 9 cents lower.

  • News Iraq bought 300,000 MT of wheat from Australia and Canada continues to encourage profit-taking in the wheat market as it reminds traders U.S. wheat prices are not competitive on the global export market.
  • The International Grains Council raised its global wheat production projection 2 MMT from last month to 656 MMT, which is adding light pressure despite the fact that the total is sharply below year-ago.
  • But profit-taking is the extent of selling interest as the Drought Monitor reflects widespread precip deficits and the extended weather outlook is not favorable for relief.
  • News Strategie Grains has cut its 2013-14 EU-27 wheat crop forecast by around 2 MMT to 132.3 MMT due to lower planted area is also limiting pressure.
  • Weekly wheat export sales of 536,200 MT for 2012-13 and 38,500 MT for 2013-14 are providing little direction as they met expectations but were not anything to write home about.

 

Live cattle futures softened around 11:30 a.m. CT to trade sharply to limit lower through the August contracts. Deferred months are seeing lighter losses. Feeder cattle futures followed suit.

  • Cattle futures softened ahead of midday on news Cargill will close a Texas processing plant due to tight cattle supplies.
  • Ahead of that announcement, cattle futures had been choppy as traders weighed the premium futures hold to this week's lower cash trade against forecasts for cattle supplies to tighten through the year.
  • Also limiting buying interest, Choice cuts slid $1.05 and Select cuts fell 64 cents this morning. Movement was impressive at 141 loads, however.
  • Weakness in the corn market is helping some feeder cattle contracts to ward off heavy spillover pressure from live cattle.

 

Lean hog futures are enjoying slight gains ahead of midday.

  • Lean hog futures continue to benefit from a steady to firmer cash hog market this week.
  • But cash market gains have kept packer profit margins in the red despite recent improvement in the pork cutout market.
  • The seasonal tendency for cash hog supplies to tighten in the weeks ahead will likely keep futures supported. But whether they mount any sustained gains will depend on whether pork market performance pulls cutting margins into the black.
  • Supply tightening could be more apparent next week as the upper Midwest is expected to see bitterly cold conditions over the weekend.
  • February lean hogs are at a slight premium to the cash hog index that was most recently projected at $85.14. This provides limited near-term direction for futures.
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